Greetings I understand that agricultural land is exempt from Capital gains taxes on sale of such property. I am an OCI with some immovable property (Mini-Plantation land as per Sale deed) which was purchased when I was a resident of India. 1) I would like to know if Mini-Plantation land comes under Agricultural land for tax computation in case I choose to sale this property in 2021. All sale proceeds will go the property owners NRO account in Indian Rupees and be kept in that account. 2) If 1 is Yes then is it possible to invest in GOI bonds under 54EC to avoid Capital Gains? What happens when these Govt. bonds mature? Are there any tax implications on maturity? 3) Can an Indian resident / Citizen GPA holder sell the property on my behalf?
1. To qualify for agriculture land, first the land should qualify the aerial distance limit from municipal limits or cantonment board and definition of land used for agriculture purpose.
2. Yes you can take benefit u/s 54EC.Interest will be accrued yearly and taxable. On maturity it will be taxable.
3. Yes
Thanks for your answer. Please let me know where I can find details of the exact definition of agricultural land for taxation purpose, and what are the aerial distance limits that I need to verify.
Dear Sir,
Hope you are doing well !!
1.Please check the below definition for the same:
Rural Agricultural land.
It means an agricultural land in India –
(a) If situated in any area which is comprised within the jurisdiction of a municipality and its population is less than 10,000, or
(b) If situated outside the limits of municipality, then situated at a distance measured-
(i) more than 2 kms, from local limits of municipality and which has a population of more than 10,000 but not exceeding 1,00,000; or
(ii) more than 6 kms, from local limits of municipality and which has a population of more than 1,00,000 but not exceeding 10,00,000; or
(iii) more than 8 kms, from local limits of municipality and which has a population of more than 10,00,000.
2.Yes, 54EC would be available.
You can invest the capital gains of up to Rs 50 lakhs in bonds of NHAI or REC, within six months of its accrual and get the exemption u/s 54EC.
Such bonds shall be redeemable after 5 years. Only interest received on such bonds shall be taxable. There would be no taxes on redemption after 5 years.
3.Yes.
Hi,
1. Sale of rural agriculture land is not taxable and you can keep the money in NRO account. The definition of rural agricultural land as per income tax act is given below:
Rural agricultural land means an agricultural land in India –
(a) If situated in any area which is comprised within the jurisdiction of a municipality and its population is less than 10,000, or
(b) If situated outside the limits of municipality, then situated at a distance measured-
(i) more than 2 kms, from local limits of municipality and which has a population of more than 10,000 but not exceeding 1,00,000; or
(ii) more than 6 kms, from local limits of municipality and which has a population of more than 1,00,000 but not exceeding 10,00,000; or
(iii) more than 8 kms, from local limits of municipality and which has a population of more than 10,00,000.
2.Yes, exemption u/s 54EC would be available.
You can invest the capital gains of up to INR 50 lakhs in bonds of NHAI or REC, within six months from the date of sale.
Interest received on bonds shall be taxable.
3.Yes, if he has valid power of attorney.
Hi
Agricultural land in Rural Area in India is not considered a capital asset. Therefore any gains from its sale are not taxable under the head Capital Gains
Rural Agricultural land. It means an agricultural land in India – (a) If situated in any area which is comprised within the jurisdiction of a municipality and its population is less than 10,000, or. (b) If situated outside the limits of municipality, then situated at a distance measured.
2. Yes
3. Yes
- For detailed discussion, please take phone consultation.